THE PESO strengthened versus the greenback on Wednesday on expectations of weak US goods data.
The local unit closed at P50.72 per dollar on Wednesday, appreciating by 4.1 centavos from its P50.761 finish on Tuesday, based on data from the Bankers Association of the Philippines.
The peso opened Wednesday’s session slightly stronger at P50.725 per dollar. Its weakest showing was at P50.825, while its intraday best was at P50.71 versus the greenback.
Dollars exchanged dropped to $824.84 million on Wednesday from the $956.38 million logged on Tuesday.
A trader said the peso strengthened due to preference for the local unit over the dollar amid expectations of sluggish US durable goods orders in September.
In August, new orders and shipments of key US capital goods saw robust growth, Reuters reported. Orders for durable goods or items that are meant to last three years or more increased 1.8% year on year during the month.
Meanwhile, another trader said the market became bullish after the central bank chief said the economy is “seeing concrete signs of economic rebound.”
“The accelerated vaccination rollouts, granular lockdowns, and the continued implementation of health safety protocols have allowed the Philippine economy to gradually reopen and for workers to regain their jobs,” Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said in a speech on Wednesday.
Mr. Diokno said appropriate policies will be crucial for the economy’s recovery and to mitigate long-term output losses caused by the pandemic.
For Thursday, the first trader gave a forecast range of P50.60 to P50.80 per dollar, while the second one expects the local unit to move within P50.65 to P50.90.
The US dollar slipped as European markets opened on Wednesday, while the Australian dollar pared gains, having jumped following surprisingly strong inflation data which raised the possibility of sooner-than-planned rate hikes, Reuters reported.
Currency markets have been generally quiet in recent sessions as investors wait for the US Federal Reserve meeting next week.
Investors are also looking to policy announcements this week from the European, Canadian and Japanese central banks for clues on the outlook for rates amid a backdrop of supply-side driven global inflation pressures.
At 0802 GMT, the US dollar index was down less than 0.1% at 93.877.
The US dollar was down around 0.4% against Japan’s yen, with the pair changing hands at 113.745 — still within recent ranges and close to the four-year high of 114.695 the dollar touched against the yen one week ago.
The Bank of Japan meets on Thursday and is widely expected to downgrade its economic assessment, with markets betting on no rate hike in the foreseeable future.
The euro was up around 0.1% at $1.1605. The European Central Bank, which meets on Thursday, is expected to take a dovish stance. — LWTN with Reuters